Tag Archives: economics

Campaigning Against a Burgeoning Economy

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In an op-ed in Thursday’s Wall Street Journal, Alan Blinder outlined several lines of attack that Progressive-Democratic Party Presidential candidates could campaign against our present burgeoning economy (the stock market dislocation notwithstanding, as even Blinder acknowledges is irrelevant).

Here is just one of Blinder’s several…misconceptions:

[S]he [Judy Shelton] argued in these pages last September that the Fed should “pursue a more coordinated relationship with both Congress and the president.” Oh my.

Well, of course the Federal Reserve Bank, the Congress, and the President should coordinate so as to not be working at cross purposes. Coordination in no way puts the Fed’s independence at risk.

Beyond that, no President is capable of threatening the Fed’s independence. That independence is statutorily mandated, it’s not a creation of any Executive Order.

Oh my, indeed.

Read the whole piece, at the link, to see the rest of Blinder’s foolishnesses.

No VoTech in Public Schools

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That seems to be the cry of those who object to a potential requirement that students should learn to code by the time they graduate from high school.

The Wall Street Journal ran another of its point-counterpoint debates, this time on the subject of learning coding—the rudiments of  programming—over the weekend.

Supporters argue

The idea is that such a skill will be invaluable in a world that increasingly runs on computer technology. What’s more, many companies report shortages of workers with programming skills.

Detractors, in addition to crying crocodile tears over supporters having ties to industry, argue

adding a coding requirement for graduation is at odds with the very purpose of public education, and its focus on humanistic values.

Extend the detractors’ logic a skosh. It would seem they don’t want any form of Vocational-Technical classes in public education. Get rid of the VoTech classes in high school that would so prepare these students, with no desire for college, for earning their way in the workaday world (earning more than many college graduates). Get rid of VoTech classes in the public junior colleges, too—after all, these two-year colleges are only for the college-bound looking for a cheaper entry into college and for already working middle-aged adults looking to improve their business skills.

Extend the detractors’ logic a small bit further than that skosh. Computers are as ubiquitous a tool in today’s world as are pens, pencils, and keyboards. Knowing the rudiments of programming is as critical to getting along in the world—now especially for engineers and theoreticians (yes, including feminist studiers)—as is basic writing.  Maybe we should stop wasting grade school money on writing and junior and senior high school money on essay writing.  After all, we have computers for that.

Or, maybe those supporters have the better argument.

Bernie Budget

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Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) has released the outline of his budget, which he claims would pay for all of his Free Stuff spending.  Here are a couple of the high points of his budget.

  • tax the investing process
    • 5% tax on stock trades
    • 1% fee on bond trades
    • 005% fee on derivative trades
  • wealth tax on the “top 0.1%”

These, without inhibiting investments, including those of the mutual funds in our 401(k)s, 403(b)s, etc, are supposed to raise more than $6 trillion over ten years, and—poof—there go all college expenses and housing costs. Never mind that this would drive up the cost of investing by a factor of five—but no, there’d be no effect on investing.

  • sue the lights out of fossil fuel companies

This is supposed to raise another $3 trillion. Never mind that with the courts being returned to ruling on the Constitution and the law rather than ruling on the feel-good social issue du jour, that’s a bit chancy.

  • cut defense spending by $1.215 trillion

This one, in the end, may be the most effective at eliminating concerns about paying for the Sanders Free Stuff industry. Once we’re no longer able to defend ourselves, we’ll be easy prey for our enemies. Or the least effective, depending on whether the perspective is ours or our enemy’s.

And as an aside, one non-economic cynical contradiction:

[A]fter arguing that people should not be judged solely by their skin color, Sanders promised that his vice president “definitively” would not be an “old white guy.”

The Value of Debt

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There seems to be little in the People’s Republic of China, at least with respect to government and government-backed debt.

Bond investors who put their faith in Chinese state-owned enterprises are swallowing another bitter pill, just two months after an earlier wake-up call.
This week, the province of Qinghai persuaded a narrow majority of investors holding dollar debt with a face value of $850 million to sell their holdings for as little as 37 cents on the dollar….
The tender came two months after a similar debt purchase and exchange deal involving bonds issued by Tewoo Group, a commodity trader based in the northern port city of Tianjin.

As someone else once said, I am altering the deal. Pray I do not alter it further.

Contradictions

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Japan raised its sales tax—consumption tax/value added tax—and promptly saw a 6.3% year-on-year drop in GDP in the last quarter of 2019. Consumer spending (did I mention that the tax was a consumption tax?) fell by 11.5% that quarter.

Color me—and hosts of others much smarter than me—unsrurprised.

Now come the contradictions, from the just US Congress-revived IMF, yet.

The International Monetary Fund thinks the consumption-tax rate will have to rise to 15% over the next decade, and to 20% by 2050. But first the fund’s wizards say Tokyo must expand its Keynesian spending to make the economy “strong” enough to bear the tax hikes to pay for the spending.

Increasing government spending, which is tax increases now or later, reduces consumption by a number of paths: it takes money out of consumers’ hands directly via those taxes; by competing for the same goods and services as consumers’, it drives up the prices of those goods and services to consumers, which reduces consumers’ purchase of them; by competing for the same resources that private enterprises need to produce it drives up the price of the resources, which drives up the prices of the end-product goods and services to consumers, which….; and it crowds out many private enterprises and consumers altogether.

And so, of course, it’s necessary to raise even further the taxes on all that reducing consumption.

Business is falling off. Gotta raise prices to make up for the decreased revenue.

Make sense? It does to the IMF. And to the Japanese government.